Flexible Furlough For Directors
Up until now, company directors have been able to furlough themselves and carry on doing their director duties, provided they are doing no income-generating activities. This is still the case, however, with the introduction of a new phase of the furlough scheme, they may wish to consider the option of ‘Flexible Furlough’. Here we explain why it may or may not be suitable for directors.
It is technically possible to go back to working part-time as this is what the new phase of the scheme is set up for – ‘flexible furlough’. However, for directors and employees that don’t work with recorded hours, there are a number of hurdles that you have to jump before you can make a flexible furlough claim.
Firstly, you need to be able to establish your usual hours.
Usual hours are either your regular hours as per your contract of employment in February 2020 (most directors won’t have this) or, if you are on variable hours, it is the higher of your average hours worked in the year to 5th April 2020, and your actual hours worked in the corresponding period last year. For example, if we are calculating the July 2020 flexible furlough claim we would use the July 2019 actual hours. Again, for most of our directors, this information is not available because firstly there is no record of your hours worked, and secondly you just work whenever you are required to. If you do have a record of your usual hours, then you can make a flexible furlough claim.
The claim will be the proportion of your furlough hours divided by your usual hours, multiplied by your usual pay.
For example, if we could establish that your usual hours were 200 a month, and you worked 100 hours in July, your usual pay is £720, therefore your furlough claim would be 100 hours / 200 hours x £720 x 80% = £288.
If you want to go down a flexible furlough claim route and think you can qualify, then we can send you a flexible furlough agreement template to help you. But please bear in mind that HMRC has indicated that they will check the validity of claims and as director flexible furlough claims are open to abuse, it is very important that you have got the records of your usual hours.
If you have any questions regarding Flexible Furlough or would like the agreement template, please call us on 01273 441 187 or click the button to send us an email.